TY - JOUR
AU - Fullerton,Don
AU - Gan,Li
TI - Cost-Effective Policies to Reduce Vehicle Emissions
JF - National Bureau of Economic Research Working Paper Series
VL - No. 11174
PY - 2005
Y2 - March 2005
DO - 10.3386/w11174
UR - http://www.nber.org/papers/w11174
L1 - http://www.nber.org/papers/w11174.pdf
N1 - Author contact info:
Don Fullerton
Department of Finance
University of Illinois
515 East Gregory Drive, BIF Box#30 (MC520)
Champaign, IL 61820
Tel: 217/244-3621
Fax: 217/244-3102
E-Mail: dfullert@illinois.edu
Li Gan
Department of Economics
Texas A&M University
College Station, TX 77843-4228
Tel: 979/862-1667
Fax: 979/847-8747
E-Mail: gan@econmail.tamu.edu
AB - This paper uses an estimated demand system that accounts for heterogeneity to calculate and compare the lost consumer surplus from a higher tax on gasoline, a tax on distance, or a subsidy for buying a newer car. We introduce a view of cost-effectiveness that compares policies instead of technologies. Each tax might induce some consumers to drive less, some to switch from two vehicles to one, and some to buy a car instead of an SUV. Our model captures these behaviors. For each rate of tax, we simulate the changes in all such choices and how the new choices affect emissions. We also calculate the equivalent variation and subtract tax revenue to get deadweight loss. Finally, we take the added deadweight loss over the additional abatement as the social marginal cost of abatement, and we plot this curve for several different tax policies.
ER -